Advantages and Disadvantages of Joint Ventures

One of the most important advantages of a joint venture is that it can help a business grow faster, increase its productivity and generate greater profits. More detailed benefits of joint ventures include (NIBusinessInfo) (Rooyen):

• Access to specialised staff, knowledge, new geographic markets and distribution networks or new technology.
• Opportunity to increase capacity and gain expertise.
• Enables the sharing of risks and costs with a venture partner.
• Access to greater resources, for example technology and finance.
• Access to the joint venture partner’s customer database to market the company’s products.
• Limited lifespan of a joint venture, therefore doesn’t impose a large commitment.
• Offers a creative way for companies to exit from non-core business.
• 80% of all joint ventures end up in the sale of one partner by the other.

A joint venture can also pose significant risks to a business. It takes time and effort to build a strong relationship and partnership with another business and it can also present challenges. An unclear agreement can result in a difficult and dissatisfactory joint venture relationship (NIBusinessInfo, NIBusinessInfo.co.uk) (Rooyen).